Federal defense contracts in Massachusetts nearly double in four years

Thursday

Jan 31, 2008 at 12:01 AMJan 31, 2008 at 2:37 PM

The amount of money spent on federal defense contracts in Massachusetts has nearly doubled over a four-year period, according to a report from the University of Massachusetts.

Jon Chesto

The amount of money spent on federal defense contracts in Massachusetts has nearly doubled over a four-year period, according to a report from the University of Massachusetts.

The UMass report, which was commissioned by MassDevelopment, shows that the value of ``prime contracts'' - those worth more than $25,000 - awarded by the Department of Defense to Massachusetts employers rose 84 percent from $4.9 billion in 2002 to nearly $9.1 billion in 2006.

The growth in this state apparently kept pace with the nation's growth in the wake of domestic responses to the Sept 11, 2001, terrorist attacks and wars in Iraq and Afghanistan.

Massachusetts' share of federal prime contracts stayed relatively steady in recent years, with a 3.1 percent share of all federal contracts in 2002 and a 3.5 percent share in 2006. The state's share has shrunk considerably since the 1980s and early 1990s, when the state regularly received more than 5 percent of federal defense funds.

However, the defense industry's role in the Massachusetts economy has grown significantly in recent years. In 2005, prime contracts accounted for 2.8 percent of the state's gross domestic product, compared with 1.7 percent in 2000, according to the report.

UMass researchers also found that defense spending supports about 115,000 jobs in the state, including people working for defense contractors and active members of the military. Defense contracts directly supported 32,000 jobs in 2005.

The biggest sectors in the state to receive defense funding are professional and technical services, electronics manufacturing, transportation equipment manufacturing and telecom equipment manufacturing. Prime contracts for Massachusetts employers rose by 9 percent from 2005 to 2006, largely due to a $687 million increase in electronic and communications equipment spending by the Navy.

``The defense industry is an integral part of the Massachusetts 'innovation economy,' '' said Rebecca Loveland, a research manager at the UMass Donahue Institute and a co-author of the report. ``It really provides an engine for technology development and research that's very important.''

Five contractors get about three-fifths of the defense contract dollars that come to the state, according to the report. Waltham-based Raytheon Co. easily tops the list, followed by General Dynamics, General Electric, the Massachusetts Institute of Technology and the Charles Stark Draper Laboratory.

``A lot of folks aren't aware that defense has a huge impact on our economy,'' said Donald Quenneville, a retired Air National Guard commander who is now executive director of the Massachusetts Defense Technology Initiative trade group. ``I know there's a lot of emphasis right now to enhance our biotech capabilities here. But, in fact, the impact we currently have with defense is much greater than that.''

The UMass Donahue Institute completed the report in the fall. But MassDevelopment, a quasi-public economic development agency, just released the report to the public on Wednesday.